This market brief is an overview of the week ahead and some of the events we see as being important to the markets.
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AUSTRALASIA ASX – 5917 ( +79 or +1.35% ) The ASX spent the majority of last week in a sideways range. Can it break out this week? VOLATILITY ALERTS: Mon 09:00 – RBA Governor Lowe Speaks For a continued move higher we must now see the ASX hold above 5746 followed by a move higher into 5985. Should this occur we will look for a move into 6020. If the ASX cannot hold above 5746, we will look for a move back down to 5590. A strong break and close below this level could see the ASX move lower into 5408; and any break of this level could see a sharp retest lower into 5102.
EUROPE DAX – 12213 ( +197 or +1.64% ) The DAX was up last week following a strong start on Monday but again spent the majority of the week consolidating. VOLATILITY ALERTS: Tue 17:30 – German Flash Manufacturing PMI, Flash Services PMI For a move to the upside we must see the DAX hold above 12115. Should this occur we will look for a retest of 12384. If the DAX can break strongly through this level, we will look for a move into 12566 and if momentum is very strong we cannot rule out a strong move to 12714. If the DAX fails to hold above 12115, we will look for a move back down to 11875 before a pause. Any break below this level however could see the DAX sell-off sharply into 11755, and if momentum is very strong to the downside we cannot rule out a move back down to 11366.
US SP500 – 3069 ( +32 or +1.05% ) The S&P is at a precipitous area here and is at risk of breaking down. We will be discussing this in the MEMBER PORTAL this week. VOLATILITY ALERTS: Tue 23:45 – Flash Manufacturing PMI Thu 22:30 – Durable Goods Orders (monthly), Final GDP (quarterly) Fri 06:30 – Bank Stress Test Results Fri 22:30 – Personal Spending (monthly) Sat 00:00 – Revised UoM Consumer Sentiment For a move higher, we would like to see the S&P hold above 2998. Should this occur we will look for a move into 3140. A strong break above this level could see this market rally strongly to 3210. If we cannot hold above 2998, we could see this market sell-off into 2902. If momentum to the downside is strong we may see a move lower into 2780; and a close below this level may result in a very fast move down to 2678.
AUD/USD – 0. 6834 ( -33 or -0.48% ) The Aussie Dollar continues to trade below 0.7000 and we are on alert again this week for any weakness below this level. VOLATILITY ALERTS: Mon 09:00 – RBA Governor Lowe Speaks For a move higher, we would first like to see the AUD hold above 0.6762. Should this occur, we will look for a retest of 0.6873, and if upside momentum remains very strong, we may see a push higher into 0.7014 before a pause. If the AUD cannot hold above 0.6762, we could see this market break lower and retest 0.6592. A close below this level could see a move to 0.6456.; and if momentum to the downside is very strong, a move back down to 0.6282 cannot be ruled out.
EUR/USD – 1.1177 ( -82 or -0.73% ) The EURO continues to drift lower and this week all eyes are on the key 1.1200 level. VOLATILITY ALERTS: Tue 18:00 – Euro Area Flash Manufacturing PMI, Flash Services PMI For a move higher we would like to see the EURO close above 1.1249 early in the week. Should this occur we could see a strong move into 1.1335 and any breaks above this level may mean a quick move into 1.1453 before a pause. If the EURO cannot close above 1.1249, we could see a fast move down into 1.1117 before a pause. A strong break of this level may result in a move into 1.1033, however any weakness below this level could see a sharp drop into 1.0977 before the week’s end.
GBP/USD – 1.2350 ( -191 or -1.52% ) Cable was sold off strongly into last week’s close as this market marches toward the key 1.2000 level. We will be discussing this market again in the LIVE CHAT ROOM this week. VOLATILITY ALERTS: Tue 18:30 – Flash Manufacturing PMI, Flash Services PMI Tue 18:45 – BoE Gov Bailey Speaks For a continued move to the upside, we would like to see Cable hold above 1.2297, followed by a retest of 1.2480 before a pause. Should this occur we will look for a move to 1.2622; and if momentum is very strong we could see a re-test of 1.2720. Should we fail to hold above 1.2297, we will be watching the key level at 1.2080 very closely. Any weakness below this level however sets this market up for a move down into 1.2000. If momentum is very strong to the downside we cannot rule out a move to 1.1896.
USD/JPY – 106.87 ( -48 or -0.45% ) The $/YEN was also sideways for the majority of last week and as such our levels remain unchanged. For a move to the upside we must now see this market close above 108.31. Should this occur we will look for a retest of 109.21, and if momentum is very strong we could see a move higher into 109.94 and potentially 111.73. If we cannot close above 108.31, we could see a move lower into 106.52. A break below this level may result in a sharp move lower into 105.50; and any further breaks to the downside may see a bigger move into 104.97.
GOLD – 1743 ( +14 or +0.81% ) Gold is testing the upper boundaries of its range and we are on high alert for a breakout this week.
For a continued move higher we must now see this market hold above 1724. Should this occur we could see a strong move to 1755; and any break of this level could see a stronger move to 1786.
If Gold cannot hold above 1724, we will look for a move back down to 1674. A break below this level could see a move lower into 1648; and if momentum is very strong to the downside we could see a move to 1605.
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